The highest priority for sellers is to find new ways to increase sales. To achieve this, they have to sell more, which in turn means they need to close more deals.
Often, this can result in salespeople focusing so much on acquiring new customers that they forget the needs of existing customers. Although we are constantly hearing that it is cheaper to retain existing customers than to acquire new ones.
According to Marketing Metrics, it is 60-70% more likely that you sell to an existing customer than a new customer and the probability of success is only 5-20%!
So why do we spend so much resources on finding new customers?
Acquire new customers compared to retaining existing customers
The most common pitfall for companies is the conviction that a fantastic product or service is enough, so customers remain.
Of course, this can be the case sometimes, but the hard truth is that it is just a short-term strategy. And even tougher insight is that sooner or later your customers can disappear into a competitor!
If you don’t make the effort, your customers will feel that you no longer value them.
What is the best strategy then? You simply need to make continuous efforts to continue earning customer loyalty.
If you have an effective plan for how to retain your customers, you have the opportunity to identify, follow and sell more to those customers where the probability is greatest that they will be your long-term source of sales.
The companies that have realized this are consciously investing in retaining customers, as they see it as the greatest opportunity to generate sales according to KPMG.
In this article, we explain why it is crucial to retain existing customers if you want to create business growth. We give you five tips (with practical examples) on how CRM software can help you retain your customers and sell more to them!
Why is it important to take care of existing customers?
Every company needs new customers. But the simplest and most predictable way to increase sales is through your existing customers who know your business and have already done business with you.
Here are five reasons why you should take good care of your existing customers.
Better conversion rate.
Existing customers have already shopped from you, and unless they are disappointed they will most likely buy from you again.
You have already built up trust, creating trust in your product or service and you know who your customers are. This makes it easier to identify their needs and predict what lies in the next step.
Less marketing. You need to spend less time and resources on finding new customers and convincing them that it is you they are buying from. If you want to build a long-term business relationship with a new customer, it costs 16 times more than retaining an existing customer.
A place for improvement.
It is a golden opportunity to improve your offers and they overpower the results just by listening to your customer feedback. Was the customer service good enough? Did your product or service live up to their expectations? Did they get value for money? Ask, listen and improve.
Higher profitability. When you sell to existing customers, there is usually less focus on price, compared to selling to new customers.
You already have an established relationship with your customers and they trust you, which makes it easier to get them interested in new products and services that you offer
Gartner Group has produced statistics showing that 80% of your company’s future sales come from only 20% of your existing customers.
You will save a lot of money! According to Bain and Company, it will cost your company 6-7 times more to attract a new customer than to retain an existing customer. At the same time, a 5% improvement in retaining your existing customers can increase the company’s profitability by 75%!
Companies should not underestimate the value of retaining their existing customers and begin to become more proactive in maintaining their customer base.
In other words – the customers you already have are your best card to invest in when you want to increase sales and make your business more profitable!
How can CRM improve your relationship with existing customers?
When it comes to CRM, the secret lies in the word – relationships.
CRM helps you get to know your customers: such as knowing who they are, how you marketed to them and how they reacted and acted. If all goes well, you continue to sell to them and that is when a fruitful relationship begins to grow seriously.
Although the CRM software fails to retain the customer by itself, the program provides you with the tools to help you manage your customer engagement activities.
The question is: what do you need to do to keep your customers?
When you start working on activities to retain customers, it is important to consider the causes and factors that increase the chance that they will want to buy a product or service from you again.
Strategies for retaining customers are nothing in theory – you need a wide range of data and information about your customers to measure and analyze their behavior.
That’s why you need a CRM system!
Five proven strategies for retaining customers
We are all customers. And we would like to feel as individuals, not as a unit or part of a target group.
In order to treat each customer individually, companies need to save information about their customers. Therefore, it is crucial to have a good customer database where you can save information on interactions and transactions in order to build long-term customer relationships.
Here we present five techniques for retaining customers that you can implement with the help of your CRM software, thus keeping customers by your side and increasing sales!
1. Discover characters in time for customer dropout – churn
The safest way to retain customers is to prevent them from choosing a company other than yours.
If you pay attention, you can see signals that the customer is about to leave your company.
To capture these warning signals, you need to be able to identify important variables in customer behavior such as: purchasing patterns, product usage, and customer service history. Then you need to analyze these signals and act before the customers disappear.
All this is possible with a CRM system.
Example: Let’s say you want to know how many of your customers have not bought anything in the last six months, which may be a sign that they are thinking of stopping using your services and instead turning to your competitors.
First, make a list of all your customers and then create another list of all sales made over the last six months using your CRM software. By comparing the customer list with your sales report you get a list of the customers who have not shopped from you for over six months.
Now you can follow up with these customers to find out the reasons why they didn’t buy from you and prevent them from leaving your business.
2. Customized offers to your customers
The more you know about your customers, the better you can customize your message to each individual.
With the CRM software, you can see a customer’s purchase history, so you can determine which type of offer is most appealing to each individual customer.
Example: Suppose you want to follow up on the customers who have shown interest in your product, but have not bought anything lately.
In the CRM system you can create a list of all customers who have not bought anything for a long time and compare it with a list of all contacts who have subscribed to your newsletter. The result is a list of contacts who are actively interested in your product or service, but who have not shown any “life signs” for a while.
With email marketing you can send them a special offer or maybe a discount on the specific product or service. It shows that you are engaged and the customer does not feel forgotten.
3. Reward Your Most Profitable Customers (VIP)
Information collected and stored in the CRM system gives you a clear picture of which customers are the most profitable. These are the customers you really don’t want to let go: we can call them VIP customers.
Knowing who gives you the most revenue means you can allocate your time and resources efficiently, as well as increase your chances of cross-selling and more sales.
Example: Let’s say you have a number of rewards to give. Focus on giving them to your VIP customers to make them more loyal to your business.
You can easily create a list of your VIP customers in your CRM system. From this list, you can then follow up and tell the rewards for the customers to make them feel special. You want nothing more than to continue to be your most profitable customers.
4. Create a personal follow-up
A relationship is something that is created between people and the CRM software makes it easier for you to manage your customer as a person and not just a number.
The effects of personal communication cannot be underestimated, according to a study conducted by Econsultancy shows that personalization based on purchase history, user preferences and other relevant information commonly found in the CRM system has a major impact on ROI.
When you add relevant information about your customers to the CRM system, you can customize and personalize your future customer communications.
Example: Let’s assume that you have already met most of your customers during the sales seminars you organize. However, there are still some decision-makers who have not come to the seminars and therefore you want to contact them and follow up with a personal invitation. How do you do that?
First, create a list of all the customers you have registered with your CRM system. Then, make a list of all the customers who have attended your seminars over the past twelve months. By combining the two lists you get a list of the customers who have not attended your seminars.
Now you know who to follow up with a personal invitation!
5. Keep your follow-up promises
Keeping what you promise is extremely important and it shows professionalism in your business.
The scheduling features of the CRM system allow you to schedule follow-up calls or emails in advance and assign follow-up tasks to your team. By doing so, you can keep track of your meetings and complete all tasks on time just as you promised.
Example: Suppose you have a list of customers that you promised to feedback to.
Time flies away and now it’s suddenly time to get the job done. When you check your schedule, you find that you will not be able to keep your promises to customers on time. You can then ask one of your colleagues and help to follow up these customers and with just a few clicks, you create follow-up activities in your colleagues’ calendars.
Although new customers are a sign of business growth, it is simply too expensive to lose existing customers, the average global value of a lost customer is high.
You have a great opportunity to increase your sales with the help of your existing customers, they know you and are more likely to buy from you than potential customers.
To take advantage of this, you need a tool that focuses on your relationships – CRM.
Using a CRM solution, you can collect and manage information about your customers and manage customer engagement activities.
Use the information that the CRM system gives you, both to maintain, develop and make your customers happy as well as to increase sales.
Among other things, a CRM can help your company to:
- Make your existing customers happy and happy
- create growth through more efficient sales
- offer fantastic customer service